Heather Altamirano

Mon, May 19, 2025, 5:54 AM3 min read

When it comes to shopping for a car, we’re all faced with the decision to buy new or used. While there are compelling arguments to purchase new, like upgraded features, full warranty coverage and less maintenance problems, finance guru Rachel Cruze doesn’t recommend it.

In a recent Facebook post Cruze wrote, “Is It a Good Idea to Finance a Car? Nope, it’s not a good idea. In fact, it’s a horrible idea.” These days, the average new car price tag is nearly $50,000, per Kelley Blue Book, while a used car is more budget-friendly at around $25,000. It’s pretty clear it’s more cost-effective to buy used, but that’s not the only reason Cruze noted for avoiding the latest make and models.

Read Next: 5 Reliable Used Cars Worth Buying, According to George Kamel

Check Out: 3 Reasons Retired Boomers Shouldn't Give Their Kids a Living Inheritance

Here are three reasons Cruze said to buy used.

According to Cruze, buying a new car is a terrible investment where you lose money.

“If I told you that I had an investment and if you put your money in you would lose 60% of it in five years, would you do it?” she asked in the post. “Probably not, right? ‘Cause you’re smart.”

She went on to explain that cars lose value “quickly” and that a new vehicle loses 9% of the value as soon as it’s driven out of the dealership.

After the first year, a new car loses around 20% of its value, while a used car will lose only a small percentage during that time period, per LendingTree.

Explore More: These 10 Used Cars Will Last Longer Than an Average New Vehicle

Another argument against new cars, per Cruze, is that it’s harder to invest and grow your money with a big monthly payment.

“Listen, we get wanting to have a nice car (or even just a reliable car). But when you do the math, you’ll see that financing a car isn’t worth it. Not only does a monthly car payment rob you of your ability to build wealth, it also steals your peace,” she said. She explained that a large car payment is money you can’t save or invest for the future.

However, one thing to note is interest rates, which are much cheaper for new auto loans.

According to Experian, a shopper with a super prime score of 781 or above can qualify for an interest rate of 4.77% for a new car, while the rate on a used car would be 7.67% for the same score. While the interest rate is lower, the monthly payment is higher. In 2024, the average payment every month for a new car was $742 versus $525 a month for a used car loan.

The final point Cruze made in her video is that a car shouldn’t be about impressing people. It’s a necessary mode of transportation that should be affordable and reliable.